Faculty of Education and Economic Studies

Department of Business and Economic Studies

Starting to close the communication gap in

Technology transfer to the PRC

Authors:

Zhouni Lin

Jiani Yang

Second Cycle

Supervisor:

Ernst Hollander  

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Abstract

Title:   “Starting   to   close   the   communication   gap   in   technology   transfer   to   the  

PRC”  

Level:  Final  assignment  for  Master  Degree  in  Business  Administration  

Author:  Jiani  Yang,     Zhouni  Lin  

Supervisor: Ernst HOLLANDER

Examiner: Akmal HYDER

Date:  2012-­‐May  

Purpose  —   We have double purpose of promoting SME’s involvement in PRC’s

development and technology transfer for sustainability in this research. From the

double   perspective   of   Chinese   business   economics   and   long   run   cooperation  

with  Swedish  enterprises,  we  investigate  and  analysis  the  main  problems  faced  

by  SMEs  when  taking  technology  transfer  to  China.     By doing this to help SMEs

to overcome the barriers during technology transfer and promote the international

technology transfer cooperation in the long run, as well as appeal technology transfer

agencies to adopt a holistic approach to help SMEs to plan and implement technology

transfer projects effectively and sustainably.

Design/methodology/approach  —   We  use  the  technology  transfer  project  in  

China’s  sewage  market  as  our  research  case  to  illustrate  our  research  problems.  

The   discussion   is   based on the existing literatures regarding technology transfer,

former researches and authentic cases about technology transfer to China, and

interviews with relevant people.

Findings   —   The   findings   indicates   there   is   huge   potential   business  

opportunities   in   China’s   sewage   treatment   market.   Information   transparency  

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plays  a  critical  role  to  foster  the  cooperation  between  transferor  and  transfers,  as  

well  as  promoting  SME’s  involvement  in  China.  Get  directly  to  the  leader  taking  

the  decisions  is  one  effective  way  to  get  access  to  China’s  market  in  short  term.  

Communication   gap   becomes   one   of   the  main   concerns   for   SMEs  when   taking  

technology  transfer  to  China.  In  mid-­‐term,  organize  workshop,  get  to  learn  with  

the   local  employee,  promote   the  understanding  between  each  other;  get   to   the  

person  who  is  capable  to  understand  the  technology  and  its  effect  is  necessary;  

For  the  long  run  cooperation,  technology  transfer  process  transparency  needs  to  

be  improved.    

Originality/value   —   This   paper   is   of   value   through   draw   out   the   fact   of  

common  problems  of   taking   technology   transfer   to  China’s   sewage  market  and  

analysis   the   reason.   Transparency   problem   during   the   technology   transfer  

process   is   drawn   and   analyzed.     Key   points   for   accessing   China’s   market   by  

SMEs  are  produced.    

Keywords:   Technology   transfer,   Culture   distance,   Whispering   game,  

authoritarian   heritage,   transparency,   China,   Sweden,   Sewage   treatment,  

Communication  gap,  vertical  contact,  horizontal  contact  

 

 

 

 

 

 

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Acknowledgments

We  would  like  to  thank  people  that  have  supported  us  during  the  composition  of  

this  master   thesis.  First  of   all,   our  Supervisor,  Ernst  Hollander  who  offered  his  

help   during   the   process   of  writing   this   thesis.  Mr.  Hollander   has   supported   us  

with  his  professional  view  on  our  research.  Secondly,  we  would  like  to  thank  our  

respondents   Cecilia  Malmsten   and   Guangxia   Li,   who   gave   us   valuable   insights  

regarding   the   technology   transfer   issues   and   the   sewage   treatment  market   in  

China.   Thirdly,   thanks   to   our   examiner   Akmal   Hyder,   as   well   as   Maria  

Fregidou-­‐Malama  and  Pär  Vilhelmson  from  the  University  of  Gävle.  

Without  these  people’s  help,  their  insight,  and  their  guidance,  this  study  cannot  

be   achieved   successfully.   Thus,   thank   for   their   thoughtful   guidance   and  

invaluable  advices.    

Gävle,  May  2012  

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Content  1. Introduction  ......................................................................................................  8  

1.1 Background  ....................................................................................................................................................  8  

1.2 Motivation  .......................................................................................................................................................  9  

1.3 Research purpose  ........................................................................................................................................  10  

1.4 Problem discussion and research questions  .......................................................................................  10  

1.5 Thesis outline  ...............................................................................................................................................  11  

2 Literature Review  ............................................................................................  12  

2.1 The concept of technology transfer  ......................................................................................................  12  

2.2 The process of technology transfer  .......................................................................................................  12  

2.3 Popular models of technology transfer  ................................................................................................  14  

2.3.1 Qualitative technology transfer models ..................................................................... 14  

2.3.2 Quantitative technology transfer models ................................................................... 17  

2.3.3 Conclusion from presented models ............................................................................ 19  

2.4 Common technology transfer problems faced by SMEs  ...............................................................  19  

2.4.1 Technology transfer process issues ............................................................................ 20  

2.4.2 Corporate capability issues ........................................................................................ 22  

2.4.3 Operating environment and National Innovation System (NIS) issues: ..................... 23  

2.5 Communication gap  ...................................................................................................................................  24  

2.6 Authoritarian heritage  ...............................................................................................................................  25  

3 Methodology  ....................................................................................................  26  

3.1 Research process  .........................................................................................................................................  26  

3.2 Research type  ...............................................................................................................................................  29  

3.2.1 Exploratory research .................................................................................................. 29  

3.2.2 Inductive & Deductive ................................................................................................ 30  

3.3 Research approach  .....................................................................................................................................  31  

3.4 Data collection  .............................................................................................................................................  31  

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3.5 Validity and reliability  ..............................................................................................................................  34  

4 Empirical findings  ...........................................................................................  36  

4.1 Findings from China’s sewage market  ................................................................................................  36  

4.1.1 Interviewer basic background .................................................................................... 36  

4.1.2 Sewage market overview ............................................................................................ 37  

4.1.3 Government targets water cleanup ............................................................................ 38  

4.1.4 Technology transfer and foreign investors get involved in sewage treatment ........... 39  

4.2 Findings from Sweden’s investor  .........................................................................................................  40  

4.2.1 A&A Architects Company .......................................................................................... 40  

4.2.2 Key points in accessing China’s sewage treatment project ....................................... 41  

5 Discussion  ........................................................................................................  47  

Research question 1:  ........................................................................................................................................  47  

Research question 2:  ........................................................................................................................................  48  

Research question 3:  ........................................................................................................................................  50  

6 Conclusions  ......................................................................................................  54  

6.1 Conclusions from the study  ....................................................................................................................  54  

6.2 Additional remarks  ....................................................................................................................................  55  

6.3 Limitations and Recommendations for further research  ...............................................................  56  

References:  .........................................................................................................  57  

Appendix:  ...........................................................................................................  64  

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List of Figures:

Figure 1: Thesis outline ................................................................................................. 9

Figure 2. The life cycle approach for planning and implementing technology transfer

...................................................................................................................................... 14

Figure 3: Research Process (Zikmund, 2000) .......................................................... 26

Figure 4: Deductive V.s Inductive ............................................................................... 30

 

List of Pictures:

Picture 1: City water supply system (Dongguan, China) ............................................ 29  

List of Abbreviations:

A & A Ahlqvist & Almqvist arkitekter AB

AB Aktiebolag, Swedish for “Joint stock company”

APCTT Asia Pacific Centre Technolog Transfer

IPR Intellectual proporty right

SWOT Strengths, weakness, oportunities, threats

SME Small and medium siezed entreprise

TT Technology Tranfer

 

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1. Introduction In order to illustrate the motivation of our research and basic knowledge about our

research objective, the background of technology transfer will be presented in this

section. It also provides our research purpose, along with the research questions.

1.1 Background

Technology transfer is characterized as the process where knowledge, skills,

methods, samples and technologies of manufacturing，and facilities that are shared

among governments and other institutions (Hargadon, 2003). Technology transfer

has been developed gradually by the commercialization of technology since the

Chinese invention “gun powder” came to Europe in the Middle ages. Nowadays,

the one who has advanced technology means that gains the advantages to make

sure the competition position. Thus, technology, as a special commodity, has

become the focus of competition and the major target for international trade.

According to the information of the United Nations statistics (UNCSD, 2009), it

estimates that in the turnover of world trade for technology was only $ 2.7 billion

in the mid-1960s, then it increased to $ 11 billion in the mid-1970s. In the

mid-1980s, the number soared to $ 40～$50 billion in the mid-1980s. After

1990s, it was over $100 billion. Thanks to the ‘peace and development’ theme of

international environment, it provides a better opportunity and a broader stage for

international technology trade, therefore, the proportion of international

technology trade is increasingly, and the speed of growth is accelerating.

Actually, the technology transfer, especially for the manufacturing technology,

has become one important part of the international business strategy of firms.

Usually, the developed countries play the role of export technology; the

developing countries play the role of technology recipient. Although some of the

developing countries have already started to embark on technology export

business, most of their scales are rather small. In contemporary, the developed

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industrial countries have a large number of scientific and technological

achievements, and have the dominant technical resources advantages.

For multinational corporations, technology transfer is one of the important ways

for them to enter new foreign markets. Meanwhile, it is also an effective way for

technology introduction party to achieve the advanced technology to enhance their

competitiveness, accelerate their development, and survive under the fierce

international competition. However, there are great gaps between different

countries when considering technology, especially between the western developed

countries and developing countries. When companies decide to enter and establish

themselves on foreign markets, the complicated process would be affect by factors

like the choice of multidimensional competitive strategies (Bradley, 2005). Thus,

a lot of business considerations will be rendered when considering taking the

technology transfers for both two parties. Thus, get to know the major

considerations can help to reduce the gaps existing between technology transferor

and transferee, to create a better environment for technology transfer.

1.2 Motivation

We consider there exists business space for SMEs to involve in China through

technology transfer. As there has big Swedish companies been involved in

China’s market successfully through technology transfer. Sweden is a

well-developed country with advanced technology; China is a developing country

needs technology to support and accelerate their development. In terms of sewage

sector, China is facing the acute problem of water shortage, and poor wastewater

treatment facilities, Sweden is well known with the advanced clean-technology. In

addition, as a world factory, China has sufficient foreign reserves, as well as the

world’s largest technology purchases countries, considering to the current

situation in Europe, we consider the feasibility of China to buy Swedish

technology is high. Thus, we wish to promote the technology transfer cooperation

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between these two counties, and appeal technology transfer agencies to pay

attentions to help SMEs take technology transfer to China through the research.

1.3 Research purpose

We have double purpose of promoting SME involvement in PRC’s development

and technology transfer for sustainability in this research. From the double  

perspective   of   Chinese   business   economics   and   long   run   cooperation   with  

Swedish  enterprises,  we  investigate  and  analysis  the  main  problems  faced  by  

SMEs  when  taking  technology  transfer  to  China.     By doing this to help SMEs

to overcome the barriers during technology transfer and promote the international

technology transfer cooperation in the long run, as well as appeal technology

transfer agencies to adopt a holistic approach to help SMEs to plan and implement

technology transfer projects effectively and sustainably.

1.4 Problem discussion and research questions

As we have mentioned the current trend of technology transfer and its significance

to both transferee and transferor, technology transfer does a good way that

benefits each other. However, there exists different kind of gaps when transferring

technology from developed country to developing country, such as the local

government policies, the law systems, IPR issues (the protection of intellectual

properties)， culture settings. These problems are examples of barriers to

mutually beneficial. It is important for companies to take these factors into

consideration when they are considering technology transfer to another party.

Thus, based on our title and research purpose, we can formulate our research

questions as followings:

Major questions:

Ø How can we understand and what can we learn from a case of technology

transfer from Sweden to PRC in sewage treatment market

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In order to answer this main research question, three sub questions have been

developed.

Sub questions:

Ø How is the opportunity for more technology transfer cooperation in China’s

sewage market?

Ø What are the common problems faced by SMEs when planning and

implementing technology transfer to China?

Ø What kind of technology transfer model can be used when considering

technology transfer to China’s sewage market by SMEs?

1.5 Thesis outline

Figure 1: Thesis outline

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2 Literature Review This section will address the main theories regarding technology transfer. First,

the concept of technology transfer will be presented, followed by the process of

technology transfer; then a review of common technology transfer model will be

presented; finally, a list of common problems faced by SMEs when planning and

implementing technology transfer projects will be presented.

2.1 The concept of technology transfer

Technology Transfer (TT), also called Transfer of Technology (TOT) and

Technology commercialization. It is the process of skill transferring, technologies,

knowledge, and methods of manufacturing, samples of manufacturing and

facilities among governments or other organizations to ensure the scientific and

technological developments (Hargadon, 2003). Early in 1993, Millman made a

blanket expression to illustrate the concept of international technology transfer: it

includes trades in various kinds of know-how; consultancy, technical, training and

military aid; and substantial elements of know-how wrapped up in the export of

sophisticated products, plant and equipment. From the perspective of business, the

focus of technology transfer is to improve the companies’ competitive advantages

(Ramanathan, 2001). From the perspective of economic, it would benefit the less

developed country with a rapid improvement and with less cost (Fung et al, 1983).

In recent decades, people have come to realize or rediscover the importance of

international technology transfer, as it is affecting the size and the patterns of

world trade in a large extent. The amount of technology trade is increasing.

2.2 The process of technology transfer

From the perspective of technology transferee, Jagoda and Ramanthan (2005)

developed a systematic approach for planning and managing international

technology transfer. Based on this approach, Ramanthan (2007) produced “The

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life Cycle Approach for Planning and Implementing a Technology Transfer

Project” (TTLC). It is envisaged that this model could help to address many

common problems that are faced by transferees of technology, proactive measures

could be adopted to avoid or minimize problems to enhance the chances of

successful technology transfer through this approach (Ramanthan, 2007). The

advantage of this approach is that it could ensure that the major activities are not

carried out carelessly or even missed.

From the holistic perspective of technology transfer project, the TTLC approach

consists of six major stages as followings:

Identifying the needed technology and making a business case to gain

corporate approval;

Searching for possible technology sources and assessing offers;

Negotiating with the short-listed suppliers and finalizing the deals;

Preparing for a technology transfer implementation plan;

Implementing and assimilating;

Assessing the impact of the technology transfer projects;

The major stages of TTLC are shown in Figure 1 below. From Figure 1, this is a

generic framework, each stages is connected with a gate. Ramanthan (2007)

explained, the prescribed tasks in the stages are cross-functional and simultaneous,

and the gate or controlling point is at the entrance to each stage.

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Figure 2. The life cycle approach for planning and implementing technology transfer

The above figure 2 shows that, information is first generated at each stage, then

out critical and in-depth evaluation at gate follows the stage. After evaluation,

decisions may be taken to make further progress, or give up the project, or recycle

it (Ramanthan, 2007).

2.3 Popular models of technology transfer

There are both qualitative and quantitative models of technology transfer. In most

cases, the qualitative models have as their objective the delineation of activities,

including the elicitation of factors, managing technology transfer and eliminate

issues that could affect the success of technology transfer. The quantitative

models are aim at quantifying parameters of importance in technology transfer

and analyzing them (Jagoda, 2007).

2.3.1 Qualitative technology transfer models

1) The Bar-Zakay Model (transferee perspective): This model is based on a

project management approach. It divided the technology transfer process into

several parts: search, adaptation, implementation and maintenance stages. It

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emphases both the transferor and transferee acquiring skills undertake

technological forecasting, long-range planning and gathering of

project-related intelligence (Bar-Zakay, 1971).

Lessons from the Bar-Zakay model:

To have a comprehensive examination of the whole technology transfer

process from the stage of search to post-implementation activities is

necessary (Ramanathan, 2007).

Disadvantage of Bar-Zakay model:

The model has limited relevance today since lots of activities, terms and

ideas expressed reflected the setting of 30 to 40 years ago. It also needs to

consider the government intervention (Jagoda, 2007).

2) The Behrman and Wallender Model (transferor perspective): this model

is proposed by Behrman and Wallender (1976)， with seven steps for

international technology transfer process. In the process, the production plan

and planning decision for position is the important step, and it’s ready to

arrive at enterprise cases including good resources evaluation. Then is to

decide the product design technologies to be transferred. And then is to

illustrate the details of the plant that is designed to produce product and

others. Thus, the plant construction and production start-up can be operated.

After start-up, to adept the process and to strengthen the production systems

to fit the local conditions are necessary. Next is to improve the product

technology transferred by using local skills. Finally, provides the external

support to strengthen the relationship with the transferor and transferee.

Lessons from the Behrman and Wallender Model:

From the model, it is told that it is necessary for the transferee to be involved

right almost from the start in the planning and implementation of the TT

project. The TT project won’t end with commencement of production. The

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clear and definite measures are appropriate to ensure the assimilation of the

transfer technology (Ramanathan, 2007).

Disadvantages of Behrman and Wallender Model

From the first three stages, the transferor tries hard to develop the

technology transfer project with less involvement with the transferee so that

it could reinforce the dependency. However, in the fifth and sixth stages,

there is a rather huge space for the transferees to assimilate and improve the

technology ( Ramanathan, 2007).

3) The Dahlman and Westphal Model (transferee perspective): Dahlman

and Westphal (1981) carried out their significant work in Korea, in

accordance with their experience in the rapidly industrializing countries

during the 1980s, they came up to the following nine stages model. This

model could be considered as an improvement of the Behrman and

Wallender model, which emphasis a lot on transferee involvement in all the

stages of the technology transfer.

Lessons from Dahlman and Westphal Model:

The technology transfer project shouldn’t be started without a careful

feasibility study since the projects usually need heavy resource commitments.

The transferee should participate with the planning from the start. It’s

essential for the transferees to develop sound engineering and project

management skills (Ramanathan, 2007).

Disadvantages of Dahlman and Westphal Model:

This model assumes that the transferee would have access to high-level

engineering skills, but in fact, it is different in many developing countries.

And it doesn’t focus on the negotiation and post-implementation assimilation

initiatives (Ramanathan, 2007).

4) The Schlie, Radnor, and Wad Model: It’s a model that seven elements

could make an effect on the planning, implementation and eventual success

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of any technology transfer project. The seven elements are the transferor (the

entity selling the technology to the recipient), the transferee (the entity

buying the technology), the technology which is being transferred, the

transfer mechanism which has been chosen to transfer the chosen technology,

the transfer environment (the operating immediate set of conditions), the

transferee environment (the operating immediate set of conditions under the

transferee) and the greater environment (the surrounding both the transferor

and transferee) (Schlie et al., 1987).

Lessons from the Schlie, Radnor, and Wad Model:

The valuable lessons of this model, is that many changes are occupying in

global business setting nowadays. It is necessary for the managers to get a

deeper insight into the transferee and transferor environment, and the

greater environment during the time of planning and implementing the

technology transfer project. What’s more, the choice of the TT mechanism

making need to based on a comprehensive understanding of the other six

elements (Ramanathan, 2007).

Disadvantages of The Schlie, Radnor, and Wad Model:

This model is still valid nowadays. The only disadvantage of the model is

there are no clearly guidelines for what a transferee should do.

2.3.2 Quantitative technology transfer models

1) Sharif and Haq model (transferee perspective): Sharif and Haq model put

forward a concept of potential technological distance (PTD) among the

transferee and transferor. They would argue that between the transferee and

transferor, it’s either too big or too small. So that it’s important for the

transferee to look for a potential transferor with an optimal PTD (Sharif and

Haq, 1980)

2) Technological “catch-up” model (transferor perspective): this model is

proposed by Raz et al. (1983), it illustrates that how a technology leader

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could assist the rate of the technology development for a technology follower

via the technology transfer. This model mainly tests three phases of the

growth of the technology transfer: the slow initial phase with high

technological capability gap; the faster learning phase with the decreasing

gap; and the catch-up phase when the technological gap is very small or even

closed. It could help the technology leaders to develop a clear policy

according to the consideration of the competitiveness, security and others.

3) Klein and Lim model (transferor perspective): Klein and Lim (1997)

studied the technology gap between the general machinery and electronic

industries in Japan and Korea. The research result shows that the technology

transfer from the leaders could play an important role in upgrading the

technological levels. Meanwhile, the followers need to complement the

transfer by putting in place measures to assimilate and modify the technology

transferred from the leader independently (Klein and Lim, 1997).

Valuable lessons of the quantitative models (Ramanathan, 2007):

It’s very important use the comprehensive analytical effort to build the need

for the technology transfer project from the beginning to the end.

Since technology transfer project usually need heavy resource commitments,

so before it starts, it should have a careful feasibility study.

A process approach should bring into use in planning and implementing

technology transfer projects..

There are many changes occurring in the global business setting nowadays.

Therefore, it is important for the managers to have a deeper insight into the

transferee and transferor environment, and the better environment when

planning and implementing a TT project.

Identify the multiple sources of the technology.

The transferees need to take part in planning and implementation at the

beginning of the technology transfer project.

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The partiers who take part in the technology transfer projects should develop

skills which using formal and analytical approaches for the better technology

transfer planning.

Having milestones and decision points is essential.

The mechanisms of a transferor to TT, according to the transferor and

transferee’s setting, the transferee’s technological capability, the relative

newness of the technology ect.

The TT project couldn’t end up with commencement of the production. Only

if there are explicit measures in place to ensure the assimilation of the

transferred technology. Otherwise the technology transfer couldn’t be said

that it’s successful.

A TT project succeed or not, it depends on the degree that the transferee and

transferor mange the barriers that impede transfer and strengthen initiatives

which facilitate it.

2.3.3 Conclusion from presented models

From the above presented qualitative and quantitative technology transfer

models, we can see the common point they are emphasizing, that is the

importance of transferee’s involve in technology transfer process and the

necessary of feasibility study at the beginning.

2.4 Common technology transfer problems faced by SMEs

As K. Ramanathan(2007) said, technology transfer has always and continue to be

considered as potential exists for conflict between the buyer and seller of

technology trade. Considerable anecdotal evidences have been gathered to focus

on critical issues and a lot of literature dealing with common problems faced in

technology transfer is available (K. Ramanathan, 2007). According to the

researches of Ramanathan (2007) and Jagoda (2007), a valuable summary of

common technology transfer problems faced by SMEs in planning and managing

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technology transfer has been presented. These problems can be classified into

three categories: technology transfer process issues; corporate capability issues

and operating environment and National Innovation System (NIS) issues.

2.4.1 Technology transfer process issues

n Problems during justification and selection stage

Ø The wrong selection of technology based on misjudgments when

preparing a business case for a Technology Transfer project (Tihanyi &

Roath, 2002; Godkin, 1988; Jolly, 1980; Roberts & Frohman, 1978).

Ø The technology selection is too complex for transferees (buyer) to

understand and assimilate. (Lin & Berg, 2001; Saad et al., 2002).

Ø The cost of buying, installing, operating, and maintaining the technology

is too high (Godkin, 1988; Voll, 1980).

Ø The technology needs considerable adaptation to suit local conditions

(Saad, 2002).

Ø The obsolescence of technology while the transfer is in progress (Saad et

al., 2002). Usually, the transferor (seller) always transfers their

technology, which is rather ‘mature’ in the market.

n Problems during the planning stage

Ø Transferor underestimates the problems when transferring the

technology to a developing country setting (Bradbury et al., 1978;

Godkin, 1988)

Ø Transferor overestimates the technological capabilities of the transferee

thereby leading to unrealistic expectations on how well the transferee

can meet target dates (Mann, 1989)

Ø Transferor cannot fully understand the real need of transferee (Lingwood,

1975; Godkin, 1988)

Ø Over concern about the hardware to be purchased and lack of attention

on the skills and information acquisition (Saad et al., 2002)

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Ø Transferee managers are not participated in the planning work, which is

carried out only by the transferor (Saad et al., 2002).

Ø The objectives of the transferor and transferee are incompatible

(Baranson, 1971; Tidd & Izumimoto, 2002).

Ø The mechanisms chosen for implementing the transfer are not

appropriate (Voll, 1980; Godkin, 1988).

Ø Poor market demand forecasting by the transferee of the outputs that

produced by adopting the transferred technology (Mann, 1989).

n Problems during negotiations

Ø Lack of trust between the both parties (Jassawalla & Sasthittal, 1998).

Ø Differences in negotiation approaches and strategies (Mann, 1989).

Ø Incompatible of goals in the negotiations (Bradbury et al., 1978).

Ø Both of transferor and transferee try to achieve results in an

unrealistically short period of time (Tidd & Izumimoto, 2002).

Ø Inability to reach agreements on product, pricing, and marketing

strategies (Tidd & Izumimoto, 2002).

n Problems during technology transfer implementation

Ø Lack of experienced technology transfer managers (Gaither & Naiman,

1978).

Ø Shortage of trust in transferor developed systems by the transferee

(Chung, 1984).

Ø Fail to obtain supplementary materials in time, which are needed for

quick implementation from the local environment (Chaudhuri, 1980)

Ø Fail to achieve the quality targets (Baranson, 1967).

Ø Cost overrun due to the poor implementation (Mann, 1989).

Ø Inadequate of tracking the technology during implementation (Bell and

Hill, 1978; Saad et al., 2002).

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2.4.2 Corporate capability issues

n Problems due to inadequate skills

Ø Shortage of training of transferee personnel (Knox, 1973).

Ø Shortage of the experiences of the transferee’s workforce and lack of

required skills at the industry level (Baranson, 1967; Baranson, 1971;

Roberts & Frohman, 1978; Tihanyi & Roath, 2002; Saad et al., 2002).

Ø Inability of the transferee to attract the required skills because of the

financial and industrial restrictions (Chaudhuri, 1980).

Ø There does exist language barriers that inhibit effective communication

between two parties’ personnel and restrict the effective transmission

and assimilation of relevant information (Baranson, 1967; Brown,

1985).

Ø Absence of appropriate incentive systems at the transferee firm for

learning and assimilating new technologies (Essoglou, 1985; Godkin,

1988).

n Problems due to ineffective management

Ø Differences in working approaches and practices between the transferor

and transferee’s managers (Baranson, 1967; Baranson, 1971; Mann,

1989).

Ø Shortage of top management guidance to decide the type of the acquired

technology, incentives, and remuneration associated with the transfer, as

well as the control of the flow of information (Nyenhuis & Welborn,

1976; Godkin, 1988).

Ø Shortage of top committed and visual management support for the TT

project (Godkin, 1988).

Ø Inability of top management to understand transferor and transferee

personnel who would work closely to form project initiation through

full implementation (Battenbur, 1980; Godkin, 1988).

  23  

Ø Individual or organizational competition for the ownership of the

technologies, and the presence of the “not-invented-here” syndrome

(Pearson & Richards, 1974; Monrone & Irvins, 1982; Essoglou, 1985;

Godkin, 1988).

2.4.3 Operating environment and National Innovation System (NIS) issues:

Ø Poor physical infrastructures (Sharif & Ramanathan, 1995).

Ø Shrinking of local markets due to the adverse changes in the economic

levels of the country (Tihanyi & Roath, 2002).

Ø Lack of supportive institutional infrastructures to support finance,

information, skill development, and technology brokering (Sharif &

Ramanathan, 1995; Day et al., 1995).

Ø Lack of local suppliers who are able to deliver quality supplies and short

of policies to develop such suppliers (Baranson, 1967, Mann, 1989).

Ø Inadequate mechanisms to protect intellectual property (Tihanyi & Roath,

2002).

Ø Over dependency on foreign suppliers and imports (Saad et al., 2002).

Shortage of training institutions and good education to upgrade skills

(Saad et al., 2002).

Ø Bureaucratic delays of government in obtaining approvals and clearances

of finalizing TT agreements (Goldscheider, 1982).

Ø Ineffective legislation and incentives e.g tariff adjustments, tax holidays,

and industry parks to promote TT (McDermott, 1985).

Ø Ineffective and sometimes excessive government interventions and

regulations (Abernathy & Chakravarthy, 1979; Tihanyi & Roath,

2002).

Ø Inability of new ventures to compete with former monopolies, which are

often owned by government (Tihanyi & Roath, 2002).

Ø The foreign exchange restrictions (Chaudhuri, 1980).

  24  

Ø The uncertain tax environments (Tihanyi & Roath, 2002).

These problems include very comprehensive fields, and are still affecting the

SMEs and some large firms who involved in technology transfer issues, especially

when the program carried out between developed countries and developing

countries. Some of the problems can be avoid and improve the situation by the

effort of company itself, however, some problems such as the issues relating the

operating environment and the national innovation systems may not be able to

figure out by self-efforts. In order to provide help to get over these obstacles,

some international agencies, like APCTT (Asian and Pacific Centre for

Technology Transfer), and UNESCAP (United Nations-Economic and Social

Commission for Asia and the Pacific) have play an important role to provide

services that can illustrate their immediate needs while improve their capacity

over the long-term to find solutions to these problems independently (K.

Ramanathan, 2007).

2.5 Communication gap

Communication is identified as an underlying factor that associated with

employee engagement (Kahn, 1992). Communication is considered as a two-way

exchange, one way dialogue, and one way listening. Poor communication in a

company could be costly. It is impacting on the bottom line directly and indirectly.

Just like a case could happen in any company, the manager asked the employee to

revise a file outing a proposed technology initiative, the manager directed the

employee to delete some paragraphs and add some news, but in a hurry, the

employee did not tell the main goal of the file. The staff members made changes

to the file because they did not realize the core objective of the file and the

changes did not meet the approval of the boss. This could be communication gap

(Messmer, 2004). Communication gap exists always because did not understand

and serve the internal boss’s core momunication needs, as well as surface

communication needs (Welch, 2011).

  25  

2.6 Authoritarian heritage

Authoritarianism captures the core of the human personality, and it could

therefore be one such moderating variable. The concept of authoritarianism

provides a framework to be analyzed the relationships between personality and a

lot of social and political issues (Rajan and Krishnan, 2002). The leader who is

highly authoritarian tends to interact with others in ways which are totally

different from that are lower authoritarian leaders. Authoritarian leaders tend to

make less use of the soft effect strategies such as friendliness and more of the hard

effect strategies (Bass, 1990). Authoritarianism is positively related to

discrimination exhibited towards out-group members (Petersen and Dietz, 2000).

The authoritarian leaders are more sensitive to the rank of a leader than

egalitarians and tend to become more submissive when they face with a high

status instigator (Bass, 1990).

  26  

3 Methodology This section is going to present our research process, research type, research

approach, research strategy. In addition, the reliability and validity of the research.

3.1 Research process

Research is a process combined with many works, we need to have a plan to make

sure we have enough time to plan, refine and change the content, and make sure to

get everything done following the appropriate stages we set, this is what we called

the research process. As Zikmund (2000) stated, it is not possible to illustrate

every activities in the research process follows a straight order in all situations,

however, it is possible to describe a common research pattern, shows as following

figure 3

Figure 3: Research Process (Zikmund, 2000)

Base on this pattern, we do our research as the following steps:

Step 1: Choose a topic

Selecting a topic, which is interesting and useful to us, then start to select an

aspect or perspective of the chosen topic, final define the research questions. In

this research, our interest is about technology transfer, technology transfer is a big

  27  

range includes a lot of aspect, after we learn the relevant information from

published articles, internet resources, and also talk to someone who knows about

this field, we decided to investigate the business considerations to technology

transfer. In recent decades, the phenomenon of developing countries import

technology from some developed counties is rather common. Of course it is very

reasonable as the less developed one needs the technology to impel their

development, and the well developed one can access the new market as their

national market have already be full. Therefore, more and more multinational

companies, including some SMEs are care about the issues about technology

transfers. Thus, our focus would be the technology transfer projects between a

developed country-Sweden, and a developing country-China.

Step 2: Search basic information and plan research design

This step also called the preliminary search; it will help researchers to determine

how much information is available to the research topic. After decide the topic

and specific research field, we start to search basic information about our topic

from reference sources, such as some handbooks, subject encyclopedias, books,

journals, library catalogs, bibliographies, online databases, and Internet sources，

looking for any relevant material about technology transfer, especially about

China and Sweden.

Step 3: Refine the research topic and select sample

It is necessary to refine the research topic based on the quality and the numbers of

located items. Usually there are two kinds of situations: one is when the initial

search renders too much relevant information; we need to narrow the topic to keep

it straight to the point. The other situation is the initial search renders too much

information; we need to broad the topic (From nova.edu.com, 2012).

In terms of our research, we’ve been through these two kinds of situations before,

finally, we ask help from our supervisor and examiner. It helps a lot by consulting

with them, the conversations helps us to clear our logic, and makes our target

  28  

much more clearly than ever before, and decided our sample, and the interview

objective.

Step 4: Gathering data and retrieve materials

After we have identified our topic and sample, we locate the information we need,

and start to research through documents, archival records, articles, books,

websites, dissertations, interviews, etc， we need to retrieve the material, which is

the most appropriate for the topic. In this step, when we cannot identify whether

the material is good or not, we consult with our supervisor, who would always

gives a lot of useful suggestions.

Step 5: Processing and analyzing the data

After retrieve the useful information, we need to get a further retrieve for

information to make sure the relevancy of the materials (From nova.edu.com,

2012). After we evaluate the relevancy and make sure the reliability of the needed

material, we start to analysis the information.

The main findings is from interviews, the respondents offered valuable

information about the technology transfer project in China. “Whispering game”

phenomenon exists in technology transfer to China, especially in public sector.

Step 6: Try to formulate conclusions

After take a further analysis with the gathered material and empirical findings, try

to answer the research questions, and formulate a conclusions for the whole

research (From nova.edu.com, 2012).

According to our empirical findings, and analysis, we drawn out the conclusion

that there is existing huge potential business opportunities between China and

Sweden to take further cooperation in wastewater treatment sector. And find out

the communication gap problems in technology transfer to China, as well as

short-term, mid-term, and long-term general solutions.

  29  

Step 7: Define new problems

When all the research work have been done, it is very important to reflect the

whole research, and note what are the limitations in the research. Finally, define

the new problems; suggest later researchers’ work about this topic.

In our research, we finally define the new problem is about the communication

gap in technology transfer process. We suggest the further researches to

investigate the involved intermediary among the technology transfer process,

finally, find specific solutions to close the communication gap, increase the

transparency of TT project.

3.2 Research type

3.2.1  Exploratory  research  

According to Zikmund (2000), when dealing with a research problem, there are

three classifications of research available: exploratory research, descriptive

research, and explanatory research.

In accordance with our research purpose, we adopt the exploratory type.

According to Yin (1993), the aim of exploratory research is to define questions

and hypothesis. In fact, exploratory research is conducted to clarify and define the

characteristics of a problem, where the aim is to offer understanding and insights

to a phenomenon, instead of providing conclusive evidences. As Yin (1993)

addressed, exploratory research is usually conducted with the expectation that

subsequent researches will be process. Our purpose in this research is to

investigate what kinds of business considerations need to be taken when

considering technology transfer projects from developed countries to developing

countries. When considering to take a technology transfer project, a lot of factors

needed to be considerate carefully, such as the business environment, the local

  30  

law systems, the economic situations, etc, anything related to the country set are

need to investigate. Thus, our research type is exploratory research.

3.2.2  Inductive  &  Deductive  

According to Husssain Saleem (2008), in research, there are two broad methods of

reasoning as the inductive and deductive approaches. Thus, the research types can

be divided into deductive approach and inductive approach. Induction is

characterized as moving from specific to the general, while the deduction is

usually begins with the general and ends with the specific.

Figure 4: Deductive V.s Inductive Source: Husssain Saleem (March 2008)

In this research, from the research process we have discussed before, we can see

that it is using the deductive approach. The research is started with a general

theory about technology transfer, after observation and analysis, specific

conclusion is drawn out, which confirmed the main literature views.

  31  

3.3 Research approach

As we know, there are two main research methods commonly used in social

science field, one is qualitative research method, and the other one is quantitative

research method (Patel & Tebelius, 1987). According to Graziano & Raulin

(1997), quantitative approach is kind of search for knowledge that will measure,

describe, and explain the phenomena of reality. Quantitative research aims to

explain specific components of a situation (Holme & Solvang, 1997). Thus,

studies like quantitative research are based on the techniques that provide

standardized and numerical data (Saunders, et al., 2007). Qualitative approach is

kind of research approach used for obtaining an understanding about something,

or a situation as a whole, and allows interrelations and social processes (Holme &

Solvang, 1997). As Saunders, et al. (2007) said, the research result of a qualitative

research is non-numerical and non-standardized data, which means it is based on

the meanings, and expresses through words, which is analyzed through using

conceptualizations.

Our research in this paper is based on analyzing the existing theories about

technology transfer, and official files and statistics published relevant

organizations and agencies, to get a further understanding about business

considerations to technology transfer. Also, conducted interviews help us to get

the primary data and generate important understanding of the investigated

situation. Thus, the qualitative approach supports our research as it fits the

character of inductive.

3.4 Data collection

Bothe primary data and secondary data are adopted in this research. The

secondary data are mainly from the relevant articles, books, and Internet resources.

The primary data is from our interviews. Interviews can provide in-depth

information pertaining to participants’ experiences and their viewpoints of a

  32  

particular topic (Daniel, W & Turber, 2010). Gall, Gall and Borg (2003)

summarized the interview style into three categories: (1) informal conversational

interview; (2) general interview guide approach; (3) standardized open-ended

interview. With the informal conversational approach, the researchers are

rather relying on the interaction of the respondents, instead of asking any specific

types of questions (McNamara, 2008). Compared with the informal conversational

interview, the general interview guide approach is more structured, but there is

still quite a bit of flexibility in its composition (Gall, Gall, & Borg, 2003). In

general interview guide approach, the questions are potentially worded depend on

the researcher who is conducting the interview. So this type of interview is lack of

consistency in the way of research question are posed as the researchers can

interchange the way that researcher poses them according to the real situation.

According to McNamara (2009), the advantage of general interview guide

approach is the ability to ensure that the same general areas of information are

collected from each interviewee, which provinces more focus than the

conversational approach, but still allows a degree of freedom and the adaptability

in getting information from the respondents. For the standardized open-end

interview approach, it is extremely structured according to the wording of the

questions. Respondents are always asked identical questions, but the questions are

worded so that the responses are open-ended (Gall, Gall, & Borg, 2003).

According to Daniel, W & Turber, 2010, this open-endedness allows the

respondents to contribute as much detailed information as they want; meanwhile,

it allows the researchers to ask probing questions as a means of follow-up. As

Daniel, W & Turber (2010) indicate, the standardized open-ended interviews are

likely the most popular for of interviewing utilized in research studies because of

its nature of the open-ended questions allowing the respondents to fully express

their experiences and viewpoints.

  33  

In this research, we conduct two interviews. One is an informal conversational

interview with a Chinese drainage expert, who offered the general city water

supply system and sewage treatment situation in current China (Mrs. Li) to us.

The other one is a standardized open-ended interview with a Swedish investor

consultant, also an experienced China manager (Ms. Malmstan) from a Swedish

construction design company.

The informal conversation interview with Mrs. Li carried out to learn the basic

real information about the sewage treatment situation and operation in China. In

order to help us get a better understand with the water sector, Mrs. Li draw the

whole city supply water system, and point out the position of wastewater

treatment. This interview was carried out through Internet video with Mrs. Li, it

last for about 45 minutes.

The standardized open-ended interview with Ms. Malmsten was performed to

learn the specific question about our research. Before the interview, we sent our

short description of our research and our interview questions to Ms. Malmsten, to

help her has a better understand with what we want from her, and makes a good

preparation with the interview. The whole interview was last for about one and a

half hour. We discussed four questions as following (detail interview questions

showed the Appendix):

Question 1 is about how does the company persuade the local customers,

especially the local government in China to accept their low carbon sustainable

design concept. By asking this question to learn how SMEs to get involve in

China’s sewage market effectively, as it is a public sector in China.

Question 2 is about how they solve the technique problem as their exists

technology gap during the project. By asking this question to guide our focus into

technology transfer, and the common problems during technology transfer.

  34  

Question 3 is about why they don’t choose joint venture as their marketing

entrance mode? By asking this questions to guide the respondents to talk about

how they enter Chinese market, and the main concerns.

Question 4 is about the difference in sewage treatment between Sweden and

China. By asking this question to learn the relation of offer and request between

this two countries in sewage treatment field. The final aim is to look into

investor’s opinion with the business cooperation in sewage treatment technology

project between Sweden and China.

3.5 Validity and reliability

A high quality research should be with high validity and reliability. As Yin (2009)

highlights, concepts that have been offered for tests, including credibility,

trustworthiness, data dependability and conformability, we should keep reliability

and validity in our minds in order to fulfill these concepts. According to

Denscombe (1998), the criterion for testing if a thesis with high quality or not is

determine by the research instruments whether are neutral or not, and if it is the

same conclusions should be drawn by other researchers. In order to increase the

possibility of getting the right meanings for the answers, researchers need to pay

extra attentions to the research’s validity and reliability (Saunders et al., 2000).

Validity refers to the degree of an investigation measures what is actually wished

to be measured (Cooper & Schindler, 1998). In other words, it means the ability of

an instrument to measure what concepts is supposed to be measure exactly.

Reliability is connected with whether the other researchers would have drawn out

the same research results if they perform the same research with the same patterns

and methods. According to Yin (2007), reliability indicates that whether the

researchers follow the exact same measures as other researchers, and perform the

same case study one more time, which means they should also reach the same

  35  

findings and get the same conclusions. It indicates that the goal is to minimize

biases and errors in the study (Yin, 1994).

During the whole process of our research, we always keep high attentions on the

validity and reliability. Frist, we conduct a lot of previous theories and researches

to support our research questions, and analysis our empirical findings. The

material we used is selected strictly according to basic criteria of information

relevancy; second, the research approaches and strategies we use in this research

and how we gather data are just presented above; third, we make interviews with a

Chinese drainage expert, as well as a city planner, and a Swedish manager with

well experiences with technology transfer. In addition, before we performed our

interview, in interview guide has been constructed to the respondents to increase

the validity of the data collections. The interview questions are strictly tied to the

research area, no leading questions were asked during the interview. After the

interview, the respondents offered further contact for researchers if we need more

information.

  36  

4 Empirical findings This section will display the findings from our empirical study. First, descriptive

information will be presented; subsequently the results from interviews will be

showed. Findings from China’s sewage treatment market and Swedish investor

would be presented.

4.1 Findings from China’s sewage market

The findings from China’s sewage treatment market are mainly collected from

published data, interview with a Chinese water supply and drainage expert and

official government reports. Base on the previous research of Li Wei and Suzanne

Wilkinson (2006)’s work on a SWOT analysis with Chinese wastewater treatment

for international business consultancies, we classified our findings in China’s

sewage market into the three followings: sewage market overview; government

targets water cleanup; and the current situations of foreign investors getting

involved in sewage treatment market.

4.1.1 Interviewer basic background

In order to know the city water supply system, include the sewage plants’

operation, we made a deep interview with Mrs. Li. She is a water supply and

drainage expert, also one of city planners. She was the one of the original

exploiters of Dongguan SSL national Hi-tech Industrial Development Zone

(2001-2011). Therefore, she has enough experiences about city water supply and

sewage treatment system to our research. Before she made further discussion

about Chinese sewage’s current situation, she explained us the basic city water

supply system to help us get to know the basic information. The common city

water supply system in China is showed as picture 1:

  37  

From the picture above we can see, first, the waterworks of the water supply

company extract the water from the river, after purification, the water is divided

into two kinds of water. One is the domestic water, and the other is the industrial

water. Then the wastewater from living area can directly send to the city sewage

treatment factory. The industrial wastewater should be dealt with the factory’s

own sewage treatment, only the wastewater meets the national emission standards

can they be discharged from the factory into the city sewage treatment factory.

The city sewage treatment factory makes a series of treatment technique process

with the wastewater, and then emission the water into the river. The emission

standard here is different. It is according to the river’s water condition. Usually,

there is high emission standard for the river with good water quality, and there is

rather low emission standard for the river with serious polluted problems.

4.1.2 Sewage market overview China is currently suffered with acute water shortage problem and water pollution,

it becomes a long-term threat to the economic growth (CIA, 2005). China is one

of the countries with the lowest water resources per capita in the world. It has 1/5

of the world’s population, but only with 7% of its water. According to Hua (2003),

and Chuan (2004), the main rivers in Northern China have been confronted with

Picture 1: City water supply system (Dongguan, China)

  38  

overdrawing problems. In additions to rivers, the ground water has been over

exploited (Xie, 1992). What’s more, the water pollution intensifies this problem

for the Chinese population. Nearly 300 million people are drinking contaminated

water.

In terms of the city sewage treatment situation, Mrs. Li told us, the sewage

disposal facility in China currently existing the problems like inefficiency,

high-energy consumption, high-maintenance rate and low degree of automation.

Mrs. Li said, for the moment, though there are several sewage plants in each city,

as lack of financial support, most of them have to be shut down, or stop working,

only third of the sewage system keep operating normally, which is a serious

situation. Thus, under this kind of conditions, the current sewage treatment system

and infrastructure is inadequate and it needs much more investment in order to

alleviate this national problem.

4.1.3 Government targets water cleanup

The Chinese government has realized the long-term threat of water overuse and

has taken actions to alleviate this problem. In the 11th five-year plan (2006-2010),

the Chinese government pledged to invest over RMB 300 billion to improve the

infrastructure construction by upgrading the facilities which have already in

operation, and awarding more new projects. By the end of 2009, there are 1572

new plants had been built, and another 2063 plants were under construction

(Chinanews, 2009). In the 12th five-year plan (2011-2015), the urban sewage

treatment processing will achieve about 120.13 million cubic meters per day. This

policy will ensure the need for more continuous large investments in the following

years. According to Liu (2004), the Chinese government encourages foreign

investors to seek investment opportunities in environmental protection projects.

Mrs. Li told us, though there look so many sewage plants in total number, the

distribution between different areas is very unequal. In fact, the eastern cities have

  39  

more financial support in sewage treatment than western cities and rural areas in

China. This is because these eastern cities contain the highest concentration of

industrialized areas, which need the largest generators of sewage. This leads to the

phenomenon that the water pollution problem in some rural areas is acute than

some urban areas.

4.1.4 Technology transfer and foreign investors get involved in sewage treatment

China brought the advanced technology from abroad like ABC, SBR method,

biomembrance process, high-pressure membrance law and so on

(www.lowreport.net). For instance, in 2001, China brought the AMT technology

from Korea, which is a new technology for industry and living wastewater

(People’s Daily, 2001); In 2010, American company secured a RMB 327 million

deal, to supply equipment to a facility in northern China. Sigpore’s Sembcorp

broke ground on a sewage treatment plant with RMB 52 million in Guangxi

Province.

In the recent visit of Chinese Premier Wen Jiaobao (2012) to Sweden, Wen stated

that Sweden is the eighth largest trading partner in the EU, the ninth largest source

of foreign investment and the third largest technology source, and it is also

China’s largest trading partner in the Nordic region. In recent years, the

cooperation between China and Sweden have achieved fruitful results in the field

of environmental protection and other fields, there will be more cooperation in the

field of sustainable development, technological innovation, and two-way

investments.

By now, there are many examples of Swedish companies have already

successfully involved in China’s sewage market. For instance, Swedish company

PURAC, a contractor brand of Läckeby Water Group. PURAC has the

international leading sewage water and drinking water process and biological

  40  

waste treatment technology. It holds extensive technology and abundant

experiences as it has more than 4000 contracts with 70 countries. PURAC set up

the Chinese office since 1992, now it has already occupied Chinese industrial

market successfully; they have already signed more than 76 projects in China.

Thus, this can be considered as the precondition of there exists space for SMEs to

involve in China’s sewage market.

4.2 Findings from Sweden’s investor

This finding is mainly from the interview with Cecilia Malmsten. Ms. Malmsten

holds a MBA in Management and Chinese from Chinese University in Hong

Kong and UCLA. She was also studied Chinese in Beijing. She held several

leading management positions in international companies for 15 years in China,

Vietnam, and Philippines, and set up one company in Shanghai, China. She is the

China Manager and partner at A&A architects AB in Stockholm since 2006. The

focus of her work is on initiating and implementing Swedish holistic sustainable

solutions in urban planning and architectural projects in China. She keeps close

cooperation with Chinese and Swedish political leaders in urban planning and

architectural projects. Cecilia Malmsten is also an advisor to several well-known

Swedish investors, Vinnova, Swedish Association of Architects and the

Delegation for Sustainable cities in Sweden. In addition, Cecilia Malmsten is a

frequent speaker at seminars in China and Sweden relating to sustainable property

development and business development in China, by using smart and sustainable

architecture, and involved some discussion about city water supply and sewage

treatment in China. Thus, she is capable to offer us the reliable information about

our research questions.

4.2.1 A&A Architects Company

Ahlqvist & Almqvist arkitekter AB is an architectural company with more than 25

years of national and international experience of sustainable urban planning and

  41  

architecture for commercial and housing developments, university buildings and

infrastructure. It got lots of successful projects and managed examples in Europe,

China and Sweden. A&A is the only one company in Sweden that took part in the

Europe’s largest network of architects: Perspective EEIG. It has been a member

more than ten years (A&A, 2011).

A&A is the only one Swedish architectural company that is assigned by the

Chinese Ministry of Rural and Urban development. It has already set up an office

in Shanghai China, and looking forward to further cooperation in the future,

especially with Nanjing.

The philosophy of A&A is that it tries hard to reduce the environmental impact by

creating sound and useful ecological solutions in all the projects. A&A advocates

the low carbon lifestyle. The core of the low carbon is energy technology

innovation, institution innovation and dramatic transfer of human survival and

development concept. It emphasizes the green ecological home. It aims to achieve

to a high-quality society with resource conserving, environment friendly. It has

the characters that low consumption of energy, sewage zero discharge, clean air,

good quality water and high quality environment (A &A, 2011).

4.2.2 Key points in accessing China’s sewage treatment project

      The  following  is  the  interview  results  from  the  interview  with  Ms.  Malmsten:  

1) Question1: Get to the right person and choose the available business model

According to Ms. Malmsten, in order to access into new market, the key is to

change the clients’ behaviors. In China, due to the authoritarian heritage,

only the leaders take the decisions in most cases. The authoritarian heritage is

succeeding to the Chinese traditional culture, so it is impossible to change it

for a short time, only to make use of it. Thus, to persuade the local to accept

your design, the main mission is to reach the top leader. One of the important

  42  

things is to identify the leader’s features to know him/her very well, choose

the leader who may be the most care about nature, sustainable development,

and environmental issues and try to convince him to by your concept (Cecilia

Malmsten, 2012).

For the sewage treatment projects, the most important thing that clients care is

how to save the costs (Cecilia Malmsten, 2012). As sewage is not for profits,

its aim is to cut down the costs and make a big effect. Cut down the costs is

always easier than make more money from it (Cecilia Malmsten, 2012). This

means the clients are seeking cost-effective and innovative solutions for

sewage treatment, from both of construction costs and operational costs. So

the problem is how to convince the clients to buy the concept (Cecilia

Malmsten, 2012)? Ms. Malmsten said this is related to the business model

that you adopt. In this business model, the most critical thing is to figure out

what are their expectations: how long do they want to achieve the positive

effect, should it be a short term or long term? And what is the short-term life

span they want, what is the long-term life span they can accept (Cecilia

Malmsten, 2012). Thus, the business model is depended on what are the

client’s expectation and the costs that they can accept.

In terms of sewage treatment, it should get a good result in a short term. If the

life span is too long for them, the current government have to invest a lot of

time, money, and other resources on the project, by the time the project can

really make profit for them, these current government leaders have already

left the current position, which means they have no responsibility for the

sewage treatment project any longer, nor to mention the profit. Thus, they

have no so much enthusiasms and patience for taking a long-term life span

project. Given the local government always like short-term output, we need to

understand the position of cost-effective and operational effective in the

  43  

clients’ mind, as well as the driving forces among this business model

(Cecilia Malmsten, 2012).

2) Question 2: Communication gap in technology transfer process

During implementing technology transfer projects, technical problems is quite

common, and complicated (Cecilia Malmsten, 2012). According to Ms.

Malmsten (2012), there are two common scenarios usually turn up. First one

is turnkey project, which refers to the company has to train the local staff to

adapt the technology, get used of the new technology and try to be familiar

with it and use it. The second one is to take over the whole project and run the

total project, and the employees would be arranged.

To avoid these problems caused by communication gap, one key point is the

assessment in the early stage (Cecilia Malmsten, 2012). Ms. Malmsten

indicates, here it is something like whispering game, a person whispers a

message to another person, and then this person whispers the message he/she

got from the last person to the next one. After the message was passed

through a line of people, the last player announces the message to the entire

group. During this process, messages changed or occurred errors when

passing a line of people (Blackmore, Susan J., 2000). In most cases, negative

affects increases when information passes from downside to upside.

Ms. Malmsten (2012) sometimes is suffered that the local leader wouldn’t

like to express their own opinion explicitly when she is working in some

projects in China, especially the public sector projects. That is the special

communication habits under the Chinese culture settings, especially

something related to polities and publics. In terms of sewage treatment, which

is belongs to public sectors, the ambiguous expression is much more common

than other situations. This kind of situation made things worse as it really

  44  

becomes the hurdle to get to learn with each other clearly, and it brings some

unnecessary misunderstandings when communicate with the project

participants. For example, when the company is trying everything to design a

plan for the clients, the clients do not interested with their work, and they

didn’t speak out their opinion that they didn’t like it. However, the company

did not realize their real thinking, and thought they may like it. Finally, when

time is up, everything is prepared, the client say no to the company. This kind

of behavior brings a huge impact for the company as they have already input

a lot of energy for the project. If the clients can tell them their real thinking at

the beginning, they won’t do so much waste work (Cecilia Malmsten, 2012).

Back to the communication gap problems inside the company, in order to

close the communication gap, some western managers may try to go down to

work with the staff to learn their real thinking, and their ability (Cecilia

Malmsten, 2012). For instance, the company organizes a workshop in local,

and the manager may go to work with the employees to try to experience

what they are doing, how they are doing, and what they are thinking, to

encourage the employees to speak out what they have the ability to do, and

what they cannot do (Cecilia Malmsten, 2012). By doing this to get to know

the real situation practically, instead of wasting resources. But for many

Chinese managers in China, very seldom of them would like to go to the

workshop and work with the employee equally. The hierarchy among the

organization is higher compared with most western companies. So, there is a

big gap between the top leader and the employees (Cecilia Malmsten, 2012).

Ms. Malmsten said, “For us, we need to know their level of technology in the

assessment, and we could know how to do it. To work with them as friends,

and try to talk to them, tell them our stories. And try to let them say what they

can’t do”.

  45  

3) Question 3: Worries to take joint venture with Chinese local enterprises

In this question, Ms. Malmsten mainly addresses her opinions generally from

the perspective of the costs and the risks for SMEs to take joint venture. As a

SME, A & A didn’t chose joint venture to enter China. According to Ms.

Malmsten (2012), joint venture is too complex for SME. The entry mode

depends on a series complicated reasons.

For instance, the control degree that the owners can accept; the majority

owner control or full owned; as well as the different priorities among the

participants. Ms. Malmsten (2012) said, “There are too many risks for SMEs

to take a joint venture, not only the complicated IPR problems, but also the

cross culture management problems, and legislations etc”. It is always

difficult to communicate with people from different background compared

with communicate with people from the similar background. Ms. Malmsten

said, “joint venture needs a big legal team, which costs lots of money. So it

may fit for some big company”.

In addition, the expectations are quite different between the parties, finally it

may lead to break up, at the sometime, and it needs to hire so many lawyers to

solve those kinds of problems. In addition, many joint ventures did not turn a

good result for some companies recently (Cecilia Malmsten, 2012).

In terms of getting better understanding with the local business environment

and market, A&A, has already had some cooperation with Chinese companies.

Based on Ms. Malmsten’s experience of living in China for over ten years,

they company does well to get to adapt the local environment. Now, Ms.

Malmsten has 30 staffs in the Shanghai Company, and hase other offices in

other places (Cecilia Malmsten, 2012). Therefore, Ms Malmsten thinks it is

no need to take joint venture for her company.

  46  

4) Question 4: Sewage treatment between Sweden and China

According to Ms. Malmsten (2012), the technology in sewage treatment and

water supply is a big different between Sweden and China, as the nature

situation is a big different (Sweden has plenty of fresh water).

However, in terms of sewage treatment, the core thing is the same, that is to

achieve lower costs. This is back to business model aforementioned. The

main way is how to do it in economic way, and to protect human life and the

environment. Thus, the point is to balance the economic benefits and the

environmental benefits (Cecilia Malmsten, 2012). Ms. Malmsten (2012)

considered there must be some economic driving forces in this project. “So

you need to know who have the right to make the decision, and who are the

most possible people can be touched by your concept” (Cecilia Malmsten,

2012). Ms. Malmsten highlights, it is important to identify the level of what

clients expected, and the life span that clients can accept, try to do it in

economic way, as well as fulfill the aim of protecting the environment.

In addition, given the advanced sewage treatment technology in Sweden and

the current situation of China’s sewage market, Ms. Malmsten considered

there are a lot of potential opportunities for more technology transfer project

cooperation between Sweden and China.

  47  

5 Discussion In this section, the findings from empirical chapter will be compared and analyzed

to the theoretical findings that have been presented in literature chapter, as well as

answer the four sub-research questions.

Research question 1:

How is the opportunity for more technology transfer cooperation in China’s

sewage market?

As we mentioned in the empirical findings, from the overview of China’s sewage

market, we can see that there are many opportunities for foreign companies to

take technology transfer to China’s sewage market that have been identified in

this research. It is identified by two main factors. One is the huge sewage

treatment requirement in current and future China. The other one is the Chinese

government’s support on sewage treatment programs, and their policies to

encourage foreign companies to involve in China’s sewage market.

In one hand, according to Zhang & Qian (1991), under the increasing needs of

water supply and the continuous water pollution problems, China is facing an

acute water shortage problem. In addition, the poor sewage treatment facility

makes this problem worse. Zhao (2000) indicated that there are more sewage

treatment facilities are required to improve the sewage treatment efficiency by

building more new sewage treatment plants, and upgrading the backward sewage

treatment facilities. In the other hand, to achieve sustainable development, the

Chinese government targets on promoting the development of water clean up

industry by injecting huge funding and policy support on sewage treatment

programs. Liu stated (2004), the Chinese government is welcoming foreign

companies to get access to China’s sewage market and encourage importing

advanced sewage treatment technology from countries that have the

  48  

well-developed technology. China is also researching the own technology;

technology transfer is another effective way to improve the sewage treatment

technology. As we presents in the literature review, the technology transfer

enables one country to achieve technology within a shorter time-span, with less

expense of research and development (Fung et al, 1983). In addition, for the

domestic sewage treatment companies, technology transfer is a good opportunity

for them to improve their competitive advantages (Ramanathan, 2001), the

technology transferor and transferee will gain their financial and other strategic

benefits from the collaboration of technology transfer projects.

u Thus, we consider there is a huge potential business opportunity for more

technology transfer cooperation in China’s sewage market between domestic

enterprise and foreign enterprise.

Research question 2:

What are the common problems faced by SMEs when planning and implementing

technology transfer to China’s sewage market?

There are a lot of problems SME suffered in each stage of planning and

implementing technology transfer to China, but we are not going to list all them

out. The common technology transfer problems faced by SMEs in planning and

managing TT projects by Ramanathan and Jagoda (2007) has bee presented in the

literature review. In this part, we put our focus on the most interesting and

important problem that we discovered in this research. That is the information

transparency problem during technology transfer process.

As Ms. Malmsten indicates, one of the problems that companies concern is the

information always been changed or showed some error when delivered from one

spot to another spot. For instance, party A is considering to take technology

  49  

transfer to party B, the basic information about the needed technology, the quality,

prices, costs, and other requirements are changed, and different with the original

information. This kind of phenomenon increases the difficulty of technology

transfer, as well as the costs of technology transfer program. We have explained it

as the whispering game effect in the empirical findings. Actually, it is also called

communication gap.

Communication gap is a state that occurs when the communication isn’t

happening as the way it should be (Blurt it. com). The reason caused this

phenomenon complicated. It can be anything from different languages, different

quality of communication method (such as the poor communication

environment/tools caused the vague messages), different background people’s

understandings, and some special benefits or other reasons to make people

intentionally to change the original messages.

Thus, in order to carry out a successful technology transfer, the task to close the

communication gap is critical important. Simplify the information delivery

process in technology transfer，improve the transparency during the whole process

would be effective to close the gap, and increase the efficiency of technology

transfer progress. As we have mentioned in the literature review, Jagoda and

Ramanthan (2005) developed a systematic approach for planning and managing

international technology transfer. This model could help to address many common

problems that are faced by transferees of technology, proactive measures could be

adopted to avoid or minimize problems to enhance the chances of successful

technology transfer through this approach (Ramanthan, 2007). However, in our

opinion, this is a holistic model, more researches about how to close the gap

should be conducted.

  50  

In addition, this communication gap is not only existing in these two parties’

communication (we can define it as horizontal communication), but also existing

in the vertical communication in a company. According to Max Messmer (2004),

the poor communication within a company can be costly, and overcoming the

communication gap is a major obstacle in a company to achieve its goals and

objectives that are set up by the top management, especially when where is

existing cultural distance. In terms of Chinese, most people are unwilling to

express their own opinions explicitly and openly. This special communication

habit of Chinese widens the communication gap both in vertical contact and

horizontal contact. It is a challenge for managers and employees to be able to

communicate straight out, to discuss the problems, to explain their confusions, to

speak off their own voices, to be honest if them can handle it. As Ms. Malmsten

indicates, it is a good way for managers to go to the workshop and work with the

staff, to communicate with them, to experience their working life. By doing this to

learn more about their employees.

u Thus, closing the communication gap is one of the main tasks for both parties

when taking technology transfer. The culture distance and special Chinese

communication habit widen this communication gap. In order to close the

gap and increase TT transparency, it is necessary to identify and utilize the

TT process, meanwhile, get familiar with the local culture characteristics and

local business operation settings.

Research question 3:

What kind of technology transfer model can be conducted to China’s sewage

market by SMEs?

From the theory part before, the popular technology transfer models have been

mentioned. There are both qualitative and quantitative models. They are the

  51  

Bar-Zakay Model, the Behrman and Wallender Model, the Dahlman and

Westphal Model, the Schlie, Radnor, and Wad Model, the Chantramonklasri

Model, Sharif and Haq model, Technological “catch-up” model and Klein and

Lim model. Many of these models are still valid in today’s business setting. The

business model that Ms. Malmsten describes in the interview is quite similar with

the Klein and Lim model. It is a quantitative technology transfer model, which

focuses on the quantifying parameters of importance in technology transfer and

analyzing them (Jagoda, 2007). This model highlights the significant role of

leaders in upgrading the technology levels during technology transfer. The

employees should use the right measures to modify the technology transfer from

the leaders (Klein and Lim, 1997).

When talking about the business model for entering new market, Ms. Malmsten

said, the core is how to get money from our client? Given the authoritarian

heritage in China, Ms. Malmsten indicates, to get a whole knowledge of the

leader, to know him/her very well would be an advantage to take TT projects in

sewage treatment market. According to Shepard, Jon & Robert.W (2007), the

authoritarianism is a form of social organization, which characterized by

submission to authority as well as the administration of said authority. Usually,

the authoritarianism is characterized as highly concentrated, and centralized

power that maintained by political repression and the exclusion of the potential

challengers (Vestal, Theodore M, 1999). In organization, an authoritarian manager

is someone who likes to take full control of the operation without taking

advantages of the skills of those around them. This person demonstrates that

his/her decisions are the only one that matters in his or her actions (Lincoln

Bittner, 2000).

However, in the technology transfer processing, there always be gap between the

managers and employee, and gap between transferor and transferee. In terms of

  52  

sewage treatment plant project, go directly to the leaders may be the effective way

to help companies get the bid. Therefore, go directly to the person who taking the

decision is a short-term solution. It cannot maintain the sustainability of

technology transfer, as the fundamental problem doesn’t be solved. For instance,

not all the people taking the decision are the experts of sewage treatment, they

don’t know what kind of technology they need exactly, when they are consulting

with the professional technicians, exchanging with the transferors, the redundancy

process would changed the original message with intentional purpose or

unintentional. This is the communication gap we’ve discussed in research

question 2. For mid-term solution, combined with Ms. Malmsten’s indication,

organize   workshop,   get   to   learn   with   the   local   employee,   promote   the  

understanding   between   each   other;   get   to   the   person   who   is   capable   to  

understand   the   technology   and   its   effect,   as  well   as   have   experienced  with  

business  and  law,  so  that  they  can  be  the  best  to  execute  their  roles.  By  doing  

this  to  close  the  communication  gap  and  achieve  better  result  for  technology  

transfer  project.   For   long-­‐term   solution,   increase   the   transparency  among  

technology   transfer  process   is  critical  necessary.  According   to  Magesh  et.  al  

(2011),   there   are   various   payers   among   the   process   when   the   research  

institutes   need   to   commercialize   technology,   like   entrepreneurs,   investors,  

market   experts,   industry   partners,   technologists   etc.   All   of   these   players  

come  from  different  backgrounds  and  with  different  priorities  (Magesh  et.al,  

2011).  To  improve  the  transparency  among  technology  transfer  project,  all  of  

the   participants’   terms   of   engagement  with   the   research   institute   and  with  

each   other   need   to   be   clear   (Magesh   et.al,   2011).   In   addition,   the   policies  

governing   the   IPR,   commercial   rights,   and   the   pattern   of   equity   holding  

patterns…need   to   be   as   transparent   as   possible   (Magesh   et.al,   2011).   As  

Magesh   et.   al   (2011)   indicate,   the   transparency,   clarity,     and   mutual  

awareness  about  expectations,  policies  and  constraints  will  go  a  long  way  in  

  53  

smoothing   the   technology   transfer   process.   In   addition,   trained   technology  

transfer  professionals  are  needed  in  order  to  realize  the  transparency,  clarity  

and  mutual  awareness.    

Though there are different models to different conditions, each model has come

up to its lessons and most of them look the same. Firstly, most of the model

emphasizes the comprehensive examination of the whole TT process before the

implementation. It aims to test the feasibility of the whole project. And it should

have an entire planning to the whole TT process. Next is to lead the transferee

take part in the TT process from the beginning to the end. Further is to get a deep

insight of the transferee and transferor environment and better environment when

planning and implementing a TT project. Last the TT project couldn’t end up with

commencement of the production (Ramanathan, 2007). These lessons are all

available for every model. No matter which model being use, the lessons make

sense.

u Thus, given the situation in China’s sewage treatment market, the main logic

reflected from the Klein and Lim Model would be fist recommended. But it

dose not mean it is completely available in really sewage TT project. As we

have discussed above, get to the leader cannot maintain the sustainability of

technology transfer cooperation in the long run, closing the communication

gap one effective way to promote SME’s involvement in China, and make

sure the sustainable technology transfer. Meanwhile, combine with the

common lessons from these models would be help to develop a holistic and

comprehensive business model to get access to sewage TT project in China.

  54  

6 Conclusions This is the final part of our research, conclusions will be drawn to answer our

main research questions, as well as a brief additional remark with useful

technology transfer information recourse will be presented in order to supplement

the information that we are incapable to provide for SMEs and other researchers.

Finally, some recommendations for further research will be produced.

6.1 Conclusions from the study

As there is only two primary data (two interviews) in our research, therefore, our

findings cannot be generalized. However, some results could be seen as a support

for existing theory about technology transfer to China, while other findings could

be a complement for other researchers and investors to get to know China’s

sewage treatment market.

Water shortage and water pollution has become a threat for China’s further

economic sustainable growth and sustainable development. Sewage treatment is

one of the effective solutions to alleviate the problem. With government’s

encourage for technology transfer with foreign companies, and the cases that

many foreign companies have been involved successfully, there exist huge

potential opportunities for international companies, including SMEs with

advanced sewage treatment technology to establish their business in China’s

sewage market. While potential business opportunities exist, different obstacles

also faced by these companies, especially for SMEs. Communication gap exists

during the whole technology transfer process, including vertical contact and

horizontal contact. The consequences of culture distance become one of the

hurdles to close communication gap.

In short-term, getting familiar with the local business operation environment,

understand the special communication habit is necessary for SMEs to implement

  55  

TT projects successful in China’s sewage market. Given the current situation of

China, to achieve short term result, the Klein and Lim Model will be

recommended in this study, as it can help SMEs to planning and implementing TT

projects in China’s sewage market. In mid-term, organize   workshop,   get   to  

learn   with   the   local   employee,   promote   the   understanding   between   each  

other;  get  to  the  person  who  is  capable  to  understand  the  technology  and  its  

effect,   close   the   communication   gap   is   needed.   While for long-term

development, closing the communication gap, increase the transparency during

technology transfer process is the effective way to promote SMEs’ involvement in

China, and maintain sustainable technology transfer.

6.2 Additional remarks

There are some agencies that have been already working on technology transfer

problems to help international companies, especially for SMEs to gain access into

Asian market through technology transfer. For instance, the Asian and Pacific

Centre for transfer of technology (APCTT). They have been done considerable

work regarding technology transfer for over thirty years, and now are continuous

to play an important role as a technology transfer service provider. APCTT has

developed a web-based technology transfer service package, which is available at

www.technology4sme.net. This website offers the technology requests and offers,

so it is a good platform to search help for SMEs to learn more information about

Asia and Pacific’s technology market. Except this website, APCTT has designed a

business-asia website www.business-asia.net. It provides information about joint

ventures, business start-ups and foreign direct investment (FDI) across borders in

Asian and Pacific region, as well as provides information about new technology

and market opportunities.

  56  

6.3 Limitations and Recommendations for further research

There are some limitations in our conducted research and analysis that need to be

acknowledged. First, the scope of our study was rather wide, it includes the whole

process during technology transfer; second, the available scientific literature is

limited; third, both of our two interviewers are not directly involved in the

technology transfer project of China’s sewage sector.

For further researches, we suggest to conduct more investigations on enterprises

that have been involved directly in China’s sewage market through technology

transfer projects. This is because it’s easier to get to learn the specific technology

process when taking TT projects in China’s sewage market. Get to learn how is

the process operate, how many intermediaries when delivering the TT information,

what are the reasons allows it exists these intermediaries which should not exists.

Finally, put focus on finding solutions to simplify the information delivery

process in technology transfer，improve the transparency during the whole process.

To sum up, our suggestions is to conduct researches focus on closing the

communication gap in technology transfer process.

  57  

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Interviews:

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Guangxia Li (2 April, 2012), secretary of the Planning and construction Bureau of Songshan Lake Science and Technology industrial park, China, Personal Interview

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Appendix:

Interview questions with Mrs. Cecilia

1) A & A insists the design concept of sustainable, low carbon. Of course this is the trend of industry development, and it is very good. Sometimes when we think of low carbon, we think of high costs. In construction industry, when we promote low carbon, it means we needs to use new material instead of traditional material, which also means higher costs in most cases. China is not Europe, though more and more Chinese realize the importance of sustainable development, it does not means they will pay for your new design concepts to gain sustainable development. So, if this is a challenge for companies like A & A to convince the local government and others to accept your low carbon lifestyle concept and would like to use your designs? How does A & A deal with this kind of problems?

2) Have you meet the some awkward situations like the Chinese construction team cannot achieve your design, as China doesn’t have the needed technology to realize it? How would you do with that? Send technician from Sweden, or provide technology consultant services, which is charges?

3) As we found some documents from European union, they recommend Europe companies to corporate with China companies in the way of joint venture; by doing this to protect their intellectual property, and to adapt the new market quickly, especially some business refers to technology transfers. My point is, A &A, a Sweden construction design company, with very advanced design concepts and strong capabilities to design fantastic works, however, China is a complicated society which the so called ”Guanxi” plays an important role, especially design some big project for the government. As a totally new comers, it may be hard for a international company to adapt China’s business environment, if the international company can corporate with the local venture, it may helps a lot to adapt the new market quickly. So, why don’t A & A choose to enter Chinese market in the way of joint venture? What worries A &A?

4) There are not so many new cities in China as before. Most of the urban constructions are reformed based on the old city, instead of exploring a new city. So it must be hard for A & A to carry out the low carbon lifestyle in the old city transformation than in a new-explored city. For instance, the city water supply system. Would you like to tell us some of your opinions about China’s city water supply and wastewater engineering compared with the technology in Sweden? How do you think if there is a big opportunity for more corporations between China and Sweden?